Editorial: Moral duty to compensate Pike families overlooked

Flames leap from the ventilation shaft at the Pike River Mine in the Paparoa Range. Photo / Mark Mitchell

At one time, John Key's political antenna would have ensured the families of the men killed in the Pike River mining tragedy received compensation. Legal niceties would have been put to one side and the Prime Minister would have responded in a way that he sensed most New Zealanders would see as fair and just. In this case, at least, that instinct has deserted him and into the void has stepped the Labour Party leader, David Cunliffe. He says a Labour government would pay the court-ordered $110,000 to each of the 29 victims' families and the two survivors. It would then seek reimbursement from Pike River Coal's directors and shareholders, using "the power of the office of the Prime Minister" to recover money from the likes of its biggest stakeholder, New Zealand Oil and Gas.

The extent of Mr Key's disconnection has been underlined by Labour Minister Simon Bridges' revelations about the Cabinet discussion on the compensation issue. It had been brief and the moral argument for a payout had not even been raised, he said.

That is extraordinary, even if the Government can point out that Pike River Coal was, in the first instance, the party ordered by Judge Jane Farish to pay the total of $3.41 million in reparations. Receivers for that company said, however, it could afford just $5380 for each family. Their legal obligation is to put secured creditors first. With this in mind, the judge noted that NZ Oil and Gas was in a position to pay the reparations. It posted a $19.9 million profit last year.

This, however, represented an appeal on moral grounds. Anything else, as Mr Cunliffe would surely discover, is very likely a legal dead end. Judge Farish's ruling was against Pike River Coal, a limited liability company. NZ Oil and Gas was neither a party nor a witness to the prosecution of it and was not named by the royal commission of inquiry as a culpable party. Shareholders, also, are not responsible for the acts of a company. In sum, there is legal shelter aplenty for the parties identified by the judge.

The Government is also transfixed by legal detail. It has escaped Mr Key that Pike River requires treatment out of the ordinary. Not that it would need to be that special. There is a precedent in the $2.6 million paid by the government to the families of the 14 victims of the 1995 Cave Creek tragedy. In that instance, the Conservation Department took responsibility even though it was never prosecuted for its negligence, and its minister, Denis Marshall, resigned. Some of the parallels with Pike River are striking.

Although the mine was run by a publicly listed company, the state must share some of the blame. The royal commission found Pike River Coal had been given a permit with no check on its health and safety regulations. And while the Labour Department's seriously undermanned mining inspectorate ordered the mine's ventilation to be improved, there was no enforcement. Inspectors also failed to ensure a second exit was formed before the company started risky hydro-mining two months before the explosion.

As with Cave Creek, the responsible minister eventually resigned, a virtual admission of the Government's culpability. Kate Wilkinson had little option given the Labour Department's obvious liability through its inspectors' negligence. Indeed, the families of the Pike River victims should be receiving compensation additional to that ordered by Judge Farish in recognition of this.

As it is, the failure of NZ Oil and Gas and its directors to do the decent thing means the Government must step into the breach.